House Health Care Bill - how bad policy is made

The House of Representatives gave us a textbook example of why elected representatives should not be allowed to make laws.

In order to pass this crap legislation this weekend, under cover of darkness without the 72 hours of "transparency" promised by Speaker Pelosi (as if anyone believes her promises), the Democrat leadership had to buy off a variety of interest groups, chief among them:

• The AMA - who got a promise not to enforce previous years plans to reduce payments to doctors under Medicare.  This was desired by the AMA's board, even as doctors oppose the plan.
• AARP - the Liberal AARP, desirous to regain it's near monopoly on Medi-Gap coverage, got the Dems to eviscerate Medicare Advantage, a popular, cost-effective, and free-market program that, unfortunately for seniors, took market away from AARP.
• Insurers - ok, for those who think insurers are losers, in this plan, they are BIG winners.  If you're an enemy of insurers, guess what - you lost.  The industry gets 30M new customers, guaranteed to purchase more insurance than they need (by the Feds mandating minimum procedural coverages), and, enforced at the tip of a sword by your federal government.  Name any other private (now semi-private) industry that can count on the Feds to force consumers to buy their products?  Think insurers are worried about having to cover pre-existing conditions? Ha!  Joke's on you, Comrade.
  Those pre-existing conditions make insurance more expensive, as those with them are more expensive to insure.  So, the insurance companies get those new customers, they get them buy plans with coverage they don't need, and won't use, and to pay more for it.  The already insured will see their costs go up as well.  This has only 2 outcomes.  Neither is pretty.  Either the market collapses due to excessive costs and insurers go out of business because they can't get the government to approve higher rates, and the default becomes the "government option," or, the government, unwilling to go the "government option" route, approves those higher rates.
  It really doesn't matter at that point whether you're insured by the government plan, or a "private" insurer.  You're going to be paying more, and certainly getting less.

Other likely winners:

• Unions.  Unions will end up with some kind of opt-out exclusion, or their "cadillac" plans will be exempted (probably through some collectively-bargained benefits loophole).
• Federal Employees - will certainly NOT be covered under the plan, and this will include Congress.

Losers:

• Everyone else.

But, hey, we'll have universal health care.

Lies, Distortions, and Misrepresentations about Health Care (Updated)

Neal Boortz is discussing the lies, distortions and misleading statements in Obama's Congressional Obamacare speech this week, and I think it is important enough that I will source the article that takes on these fabrications and quote it extensively here for you.  The original article was written by Michael F. Cannon and Ramesh Ponnuru for National Review Online.  You should read the whole thing, it details 21 of these.  Biggest whoppers:

• “There are now more than 30 million American citizens who cannot get coverage.” An outright falsehood, whether you use the president’s noncitizen-free estimate or the usual estimate of 46 million.  The 30 million includes those who CHOOSE not to get insurance (estimated to be about 15M).  The 46M adds the 16M illegals without insurance.  There is a further number of the remaining uininsured who are between insurance coverages (i.e. job changes).  
• “And every day, 14,000 Americans lose their coverage.” The paper that generated this estimate assumed that two months of severe job losses would continue forever. Applying that paper’s methodology to a broader period of rising unemployment (January 2008 through August 2009) produces a figure below 9,000 and it assumes these losses are permanent.
• “One man from Illinois lost his coverage in the middle of chemotherapy. . . . They delayed his treatment, and he died because of it.” He didn’t die because of it. The originator of this false claim, a writer for Slate named Timothy Noah, has admitted he got it wrong.
  
  Jake Tapper spreads even more light on these outright distortions.
• Requiring insurers to cover preventive care “saves money.” Nope. According to a review in the New England Journal of Medicine, “Although some preventive measures do save money, the vast majority reviewed in the health economics literature do not.”
• “The [bogus] claim . . . that we plan to set up panels of bureaucrats with the power to kill off senior citizens . . . is a lie, plain and simple.” Sarah Palin claimed that Obama’s “death panels” would deny people medical care, not actively kill them. If Palin believes her claim, it is not “a lie, plain and simple.” Most important, the substance of Palin’s claim is, in fact, true. Obama himself proposed a new Independent Medicare Advisory Council with the authority to deny life-extending care to the elderly and disabled.
  
  
  
  

As Usual, Rob is Wrong

Rob (The Online Magazine...) attempts to belittle the tea partyer's protest today.  As usual, he's pretty much reading straight from the DNC's fax machine.

He says: "the health care reform bill specifically states illegal immigrants are not afforded coverage." 

• This is true, however, the bill includes no provisions for verifying legality of individuals.  When House GOP members presented an amendment to require the use of the system (SAVE) that employers are required to use to verify right to work here, it failed on a party line vote.  So, one can genuinely question why these provisions wouldn't be built into the bill, and their absence (willfully) suggests that perhaps Dems have no intention of enforcing this provision, thus making anyone who supports such a bill, a liar.
• While we assumed the white house was discussing the House plan, they are only defending their 2.5 page outline plan on the white house web site (remember when Republicans were lambasted for not having a detailed plan about some such thing this year?).  Jake Tapper reports that the WH is considering ther SAVE program and would explicitly deny coverage to illegals.  Maybe Obama listened to Joe Wilson?

He says: "The people DO want health care reform. It was a major plank that President Obama...blah, blah, blah."

• It may be true that people want health care reform.  However, it is painfully clear that the people do not want the kind of reform being presented by Dems in Congress and supported by Obama.  Despite a small bump in approval to 46% following this week's speech, a majority of Americans polled oppose Obamacare, and have since mid July.  Finally, by vast, vast, vast majorities, 79% of Americans like their current health care plan.  Of course, if they didn't why would Obama keep promising, "If you like you like your current plan, you will get to keep it."

He says: "And nowhere in any of the reform proposals nor in any of President Obama's stated plans does it call for increased taxes, save rolling back the Bush tax cuts to the rich."

• Whoooooaaaaa there.  That is still a tax increase.  Although it falls on the Democrats favorite group to rape for money, it's still a tax increase
  

Additionally, there are numerous proposals in Congress go after more taxes (the Cato Institute studies):

• Democrats propose eliminating health savings accounts, which allow people to save money for health expenses tax free.  83% of users of HSA's are low-middle income people.  Estimates are this would result in an additional $11B of taxes.
• Democrats are looking to get $210B in revenue by ending the deductibility of medical expenses if they exceed 7.5% of your income.  73% of these deductions are taken by people making less than $75k/year.
• Dems are considering raising taxes on beer (tripling it), on wine (quadrupling) and liquor (a 25% increase), as well as on sugar-sweetened beverages.  These kind of taxes hit poor and low-income people much more than they hit the "rich." Dems estimate they will get over $60B annually from these.

 So, don't believe what you read over there.  It's probably wrong.


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Preventative Medicine - not always a cost saver

Jason Fodeman writes in National Review Online about the costs of preventative medicine and why it's not always a cost-effective means of treating disease.

Fodeman writes:

"At first blush, prevention seems great. Preventing and detecting disease early to save lives and money — sign me up. But, as new research in this week’s Journal of the National Cancer Institute highlights, prevention unfortunately is not as simple as President Obama would like to depict. Two Dartmouth physicians studied prostate cancer diagnosis-and-treatment statistics, starting with the introduction of prostate-specific antigen (PSA) screening."

This has some meaning to me, since both my grandfather and father had prostrate cancer (both ended up being treated surgically), putting me in a high-risk group for the disease. Because of that, my prostrate screening, including the PSA test, started at age 40, vice 50 as recommended for most men.

The study concludes that since the PSA test came online in 1987, "an additional 1,305,600 men have been diagnosed with prostate cancer, of whom 1,004,800 have been treated for the disease."

But, this wonderful preventative measure has an (un?)intended consequence. "Many of these patients were over-diagnosed and over-treated. They were treated unnecessarily for symptoms they did not have and never would have had. Even when employing the most optimistic benefit assumptions, [the study concludes] 'the vast majority of these additional 1 million men did not benefit from early detection.'"

The point is, while prevention is a wonderful thing, an attempt to sell health care reform by extrapolating savings from "prevention" ignores the additional costs borne by the system from measures such as these.

As we are seeing, science is enabling us to determine likelihoods of having particular pathologies based on these kinds of tests and even genetic factors. What happens, when we take health care decisions completely out of the hands of doctors and patients and place it in the hands of a single payer government system and its series of boards and councils (who are empowered to control costs, since government will necessarily have to operate within some cost constraints, since Obama won't be president forever), when they have this knowledge?

You think "death panels" are ludicrous...

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A Quick Thought on Medicare and Health Care Reform

I spent some time recently talking to my mother-in-law (70ish) about Medicare, since I have no first-hand experience with the program and wanted to find out if she, as a Medicare user, was happy with the experience and a little about how the program works.

Here are my 2 key take-aways:

1. She's generally happy with Medicare, but, she still has to pay a healthy monthly premium for her health insurance for Medicare supplements, but, she pretty much has one of those gold-plated policies that covers everything.
2. The prescription drug benefit passed during the Bush years was a very good deal for her.

So, I wondered, if seniors are generally happy (and, a sample size of 1 isn't very good), then why can't we just extend Medicare to everyone?

Well, the answer should be obvious to just about everyone - we just can't afford it. We can barely afford Medicare, Medicaid and S-CHIP now, and to extend such a system to every person in the country would require such confiscatory taxation as to destroy economic growth in this country. In fact, with the government in control of about 50% of the health care spending now, it is more a part of the problem than a part of the solution.

My personal opinion is that the taxation system that rewards employers for providing health benefits is the biggest problem we have in health insurance. If we instead passed those benefits directly to the consumers of health care, we'd give a much better chance of making health care more portable, which would address some of the pre-existing conditions problems, and we'd make it more affordable, and address some of the uninsured.

No doubt that this would still leave many uninsured, but, rather than tearing down the system completely, and remaking it in the government's image, this would retain the system of private insurance, which will certainly allow for more innovation, better allocate scarce resources, and not place health care decisions into the hands of a)bureaucrats with no stake in individual's health decisions, and b)elected officials who may be corrupt, incompetent, or both.

Then, once we start to bound the problem better, we can begin the hard work of dealing with the chronically uninsured, and the poor.

This is really a philosophical debate. Either you believe that the government can efficiently and effectively run the health care system, or you believe markets are the best way to manage resources. In the current debate, there really appears to be little middle ground, and I side with those who look at what government does, at the hubris of those suggesting that government can do this (if only this group of smart people run it), and agree with them that individuals, operating within a (relatively) free market, can make the best choices about their health care and how to spend their money.

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Health Care Debate and Facebook

When you participate in Facebook, and people start political discussions (however benignly) on their sites, you run into real morons.

In a discussion about health care, this gem was a response to something I posted:

"nothing good comes easy,,, Obama and this administration will complete in some form a health care reform plan that was started by Hillary Clinton way back when Bill Clinton was in his first term. The folks on the hill basically threw Hillary under the bus. As they say, "well behaved women rarely make history". I have faith that we will have something,, people like me, uninsured, in our hands by August 8th. At the very least, we should have the same healthcare that we pay for for our congressmen & women to have."

First, this person is stuck under some kind of a rock, since Obama himself has backed off and now only wants something on his desk by the end of the year. It isn't going to happen by August 8th. Sorry.

I don't understand the Hillary references? Is she talking about 1994? I don't know where this person was in 1994, but Hillary pretty much handled the bus throwing on her own. Is she talking about 2008? I dunno...

I have to admit, I have never heard the phrase..."Well behaved women rarely make history." I'd counter and say Mother Theresa was well behaved, she made history (and Sainthood). But, maybe she's the exception. Again, I don't know where people get this stuff.

As for "the same health care that we pay for for our congressmen and women [can't leave out both sexes, that should tell you something about the poster] to have," hmmmmmmmmm, seems no one is proposing that for this go round. As I recall, the Republicans actually proposed that in 1994, but, Hillary was having none of it.

Finally, even if Obama had a bill on his desk on August 8th, most provisions of the House and Senate bills are not going into effect until 2013. Funny how that is AFTER the 2012 election cycle. Let's see, Obama declares victory before anyone actually gets to experience the program before his re-election year.

You see, this is just politics as usual, or, you could call it, "The Chicago Way."


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More on Wal-mart and Obamacare. Or, why you should be scared, very scared...

David Suderman explains better than I why Wal-mart would support Obamacare.

"Wal-Mart, the nation's largest employer, can afford the costs imposed by an employer mandate. Smaller competitors are likely to find it harder -- and they're not too happy about Wal-Mart's announcement"

David Brooks explains why Congressional leadership (as opposed to Executive) on policy and lawmaking, as we have witnessed with Porkulus, Cap 'n Tax, and Obamacare, is bad for the country, but good for some corporations.

All these are messes. Someone will have to clean them up.

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Obamacare: Watch Large Corporations Jump On

Wal-mart is signing on to Obamacare.

This should really come as no surprise, as there are lots and lots of good reasons for Wal-mart, and other large corporations to sign on to a government run health care system.

The shifting of health care costs from employers to government (read: taxpayers, i.e. YOU) is a natural boon for large employers. It makes even greater sense to large employers with massive unionized workforces, or for those threatened by unionization.

For largely union shops, this essentially levels the playing field for these companies against upstarts. For established companies, health care costs are one of their largest costs of employment, and the rate of increase in health care costs throw much uncertainty into these company's planning processes. So, they see a government run system as a way to make these costs the same for everyone, and to take them off their hands and shift them to ours. They also see them as a way to shelter them from competitors, especially non-union competitors, who have lower costs structures.

For Wal-mart, some certainty has to be in order, and, I expect this is an attempt to buy protection from unionization themselves. If Wal-mart can say, "Why do our employees need a union when there is a government run health care system for them to participate in?"

The groups I can't understand why they are behind Obamacare are unions. Of course, I fully expect the health care benefits that are collectively bargained for to be exempted from any government run plan. Unions will not sit by and stand for employers telling their rank and file to join the government run system, when they have pretty generous, bargained-for benefits.

Anyway, my point is - any health care plan is going to be shaped more by Democratic party politics than actual health care needs.

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Health Care - More Discussion

I promised more analysis of Ramesh Ponnuru's recent WSJ article suggesting universal health care coverage is probably not the best goal for healthcare reform.

Among his arguments, Ponnuru points out that more Americans are concerned about cost and portability, vice coverage. In other words, we care about the impact on us, not on everyone.

Ponnuru posits that two reforms will both address the cost and portability issue head on, and have the secondary effect of leading to more insured, those being:

1. Break the bond between health coverage and employer-provided benefits. This was the centerpiece of McCain's plan, and I know people who have fantastic health benefits hate to hear this - it is the single biggest problem with our health care system. In McCain's plan, essentially the tax break that goes to employers today for providing coverage, would go to the covered, in the form of a tax credit to use on health care spending. In McCain's plan, extending this to all taxpayers would immediately increase coverage. It would make some - at the high end of the benefit scale - pay more. It was designed to be a wash on the majority of employed people.
2. Allow consumers to cross state lines to buy health care plans - this would have the impact of allowing consumers to purchase cheaper policies from providers in states with fewer mandates and lower costs for the administrators. Sure, these consumers would get less generous plans, but they'd get cheaper plans, as well.

With both these reforms intact, and direct government subsidies (those tax credits), you'd immediately benefit from lower costs for most plans, and more people covered. It might not lead to universal coverage, but it would significantly increase the number of people covered. As we know from system analysis theory (and practice), the marginal costs to squeeze that last bit of efficiency from any system, far exceeds the benefits gained. Health care, as a system, is no different.

It is still law in this country that no one can be denied life saving health care. That won't change, and we'll still see the cost of the uninsured spread across those with insurance, but the percentage of your bill that goes towards that will go down, as more are actually insured. I think this is perhaps the best we can do, without a radical makeover of our entire system, which, will be in the European manner, and lead to rationing, reduced services, and less availability of health care.

Thanks.

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Free Market reform of health care? Can it reduce the uninsured?

Ramesh Ponnuru argues against universal health care coverage, and for free market reforms that would greatly reduce the uninsured in today's New York Times.

If you're on the universal health care side, try broadening your horizons. If you're for free market reforms, get some more ammunition.

More analysis later from me.

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Health Care - Why Hard Cases Make Bad Case Law

William F. Buckley used to like to say that "Hard cases make bad case law" as a way to counter arguments that Liberals usually used to explain why their particular choices needed to be enacted into law.

These usually involve some hard luck sob story that is designed to stir people to say "We should do something about that." The Conservative typically has a difficult time refuting these things, focused as we tend to be on the larger picture. The reality is the consequences of setting policy based on the needs of the few usually results in unintended consequences in regards to the needs of the many.

Such is the case of Pamela Rinchich, who Rob (of The Online Magazine formerly known as Rob's Blog) highlights today (guess this story ran on CNN this week).

While the story says her case is "not unique" it provides us no numbers to back this up, and the Families USA group who is pushing this story does not give us any numbers either.

But, applying a little Radcon math to it, we can make some assumptions - let's assume that about 92% of Americans who want to work today are employed, and that of those 92%, all of them have either employer-provided health coverage, or can provide it themselves through a private policy (it's Radcon math, y'all, so unless you can improve the assumption with some actual numbers, I am going with it). That leaves the 8% of Americans who are now unemployed. The latest number who are drawing unemployment benefits is about 7 million Americans. Again, the number is higher for all unemployed, but let's limit our discussion to those drawing unemployment benefits, as they would be the one's who fall into Ms. Rinchich's scenario.

Let's assume all of them lost their employer-provided health insurance with their jobs and went the COBRA route. Of those 7M, how many need to use their COBRA benefits for the 18 months for something other than routine medical care? About .5% of Americans will be diagnosed with cancer each year, and let's assume that the vast majority of them are in retirement, say 50% are, so they are ineligible for our survey. That means about .25% of people who fall into the "employment eligible" group have cancer. Let's multiply by 10 to make that number account for other expensive diseases, and we'll get to 2.5%. So, using very crude radcon math, we're looking about 150,000 people who fall into Ms. Rinchich's scenario. Of those, we can expect that some number of them will be covered completely under the COBRA scenario, and eventually find work again. Since COBRA benefits can be carried for 18 months, let's assume that of that 8% unemployed, half of them find work in time to resume their medical benefits. That cuts the number down to 75,000. So, that's my estimate of the number of people who fall into Ms. Rinchich's category.

Certainly 75,000 of anything does not make it unique, so, I agree that her situation is not unique. But, is it worthy of radically altering our entire health care system, which seems to work just fine for the 260M or so of covered people? Hard cases make for bad case law.

Since Rob cherry picked the article, I have some more questions that the article didn't answer:

• Ms. Rinchich is now married. Is she not covered under her husband's health plan? Is he unemployed, too? Is it a pre-existing condition for her that they won't cover her? (Seems given the political persuasion of CNN, this would be another chance to bash the current system, so I assume this is not the case).
• The story says she owes $268 dollars to her cancer doctor. Can she NOT come up with $268? Is there no United Way where she lives? No church's or other charities?
  
• Has she run out of money to pay anything? Does her husband have no money? She was laid off in March 2008. Under COBRA, she would have 18 months of coverage at her expense, but, less than 5 months later (Honeywell covered her through September), she has quit paying the premiums, apparently. Why? The article leaves us to wonder. My suspicion is she elected not to pay for her COBRA coverage, which probably she was eligible for in September, when her Honeywell severance package likely expired in September.

What Rob doesn't tell us is that the just-passed Stimulus package includes a provision where the government will pick up 65% of COBRA premiums as part of the unemployment package. So, for people in her situation, there is already some relief.

That doesn't answer the problem. We have a problem with coverage in this country. The government just isn't the answer.

See my previous post on this for more.


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Health Care Debate

My co-worker and liberal foil and I have had a back and forth via email over health care. Here's some if it.

Me:

I was very bothered the other night in the debate to hear Obama, the champion of “change” try to scare voters by saying that McCain wants to do away with the tax break that employers get for providing health care. IF ONE IS EVEN A PASSING STUDENT OF OUR CURRENT SYSTEM, ONE MUST ACKNOWLEDGE THAT THE CURRENT METHOD OF EMPLOYER-FUNDING IS THE REASON WE ARE IN THE MESS WE’RE IN. I write that in all caps, because, if you don’t agree with that, there is no point in reading further.

I have to start with first principles. These are mine, not someone else's, though I am sure others believe them as well. They are not the only first principles I could list, but they are the most apt to this problem:

1. I believe that a free and open marketplace provides the best odds for distribution of resources in a market/economy.
2. I believe that individuals, given enough information, will make decisions that are in their best personal interest (this would include health care decisions, as well as financial decisions, among others).

I will stipulate these facts vis a vis the health care situation in the United States, and agree that addressing these issues would go a long way towards solving the problems many people see in the health care industry:

1. Health care costs are rising out of control, outpacing increases in wages, and even the inflation rate, and that this is a decades-long trend that any solution must reverse.
2. There are far too many people (who are not in transitory situations), who are without health insurance, and this number must be reduced, to zero as a goal.
3. A pure free market insurance solution will seek to apply higher costs to the sick.

Looking at the range of solutions, they are bracketed by a purely consumer based solution, where we all pay what the services actually cost, out of our pocket, and a completely government-run entitlement system, where we pay nothing at the time of service, but the system is funded by the government (through our tax dollars, deficit-spending, whatever schemes the government needs to devise to pay the providers). The answer lies somewhere in between these two extremes.

For me, in evaluating the health care position of a candidate, I care whether the plan adheres to first principles, as well as how well it will address the realities stated above.

Neither John McCain, nor I, are advocating turning each individual loose to handle health care costs on their own, negotiating with doctors separately. Obviously, insurance companies bring the power of a collective to bear, and use that power to influence the prices they pay to doctors, hospitals, drug companies, etc. I don't think anybody with a serious proposal is suggesting anything other than using the insurance model for health care. I advocate having a system that encourages a national market for health insurance among many insurers, while at the other extreme are those who advocate a single insurer, the US Government.

My core disagreement with Obama's plan, is that the ultimate result is government will put itself in competition with private insurers, and due to its size, continuing demands from constituents, and Congress's insatiable appetite to buy votes, we will find ourselves with a single payer system. I realize "government run healthcare" is an invective to some, but, recall, I started this thread after Obama said that John McCain wanted to raise his taxes via the elimination of the employer health care tax credit, a statement that is arguably untrue.

Where the government is making decisions for us, we lose freedom. Since this is ultimately about freedom, the question voters should be asking themselves is, "Who do I trust to make decisions about my health care? Government bureaucrats, or myself?" You might say, how is that different from today, with the role of government bureaucrat played by a private insurance company?

The difference is, in the government case, you have no alternatives to choose from and decisions will be made by a government who is prepared to enforce its decisions at the point of a gun. In a thriving, free-market system, the disgruntled consumer would switch to another insurer. In a government-run system, are you going to throw the bums out? That doesn’t seem to have worked with most of the crises of our time.

I responded to his specific comments:

[Him] I think we can agree that the current system for health insurance and health care is broken. The discussion is how best to address it. Also note that I'm not convinced the Obama plan is the best plan.

[Jay] The current system of employer-funded health care is, indeed, if not broken, seriously flawed, and has been since its inception. Growing out of the Blue Cross days of the 20’s and 30’s, it was developed and expanded during WW2, in an environment of wage controls; offering health insurance as a way for employers to attract employees and retain them was later encouraged by the government through tax policy. Thus, we have our problem today. It was interesting to hear Obama praise this system in debate 2, and attempt to scare people that McCain wants to change this system. Some change there.

[Him]The first thing to point out is that "government run health care" is often thrown about like an invective.

[Jay] If everyone agreed the government ran things great, we wouldn't see it as an invective? I point it out and will continuously point it out, because I believe this is absolutely NOT the path I, nor the majority of Americans want to follow. As much as we know what caused this current mess, we do not want to replace it with what will ultimately be another, equally bad for the consumer, and really, really, really bad for the taxpayer, mess – which is what a single-payer, government-administered, system will be.

[Him]Since McCain has benefited from government run health care for just about all his life, it must not be all bad.

[Jay] Whoa! Do you think McCain went into the military and then public service because of the quality of the health care? I can tell you, having experienced the military health system firsthand, that most assuredly is not why he did it (maybe it had more to do with two generations of sailors before him?). Maybe he did go into politics for the health care. Having lived in DC, and been part of the DoD complex, I know what the Federal Employees Health Benefit Program (FEHBP) is, and, actually, as a model for the solution, it may be close to what we actually want. The interesting thing about that, is during the Hillary-Care fiasco, at one point the Republicans were proposing (I think it was Phil Gramm, that wascally McCain advisor) that we extend the FEHBP to all Americans, under the guise that if it were good enough for Congress, it ought to be good enough for the rest of America. Of course, that is ancient history, and we still would have had to figure out the funding issues.

[Him]Furthermore, many other countries have found ways to improve the health care of their citizens through some sort of government intervention.

[Jay] And many have ended up with rationing (ending up with long waits for services) and price controls, and a two tiered system that sees the wealthiest either going off-shore, or paying doctors (in some cases illegally) under the table. I'm curious to hear the good examples.

[Him]So we need to stop using that phrase like some kind of scare tactic.

[Jay] I am resisting the temptation to launch into a tirade that “government-run health care” has now entered the lexicon as verboten. How about not scaring them about McCain’s plan?

[Him]One problem with free-market health insurance is you lose the bulk buying benefits of a group policy like you get with an employer (be it private or the government).

[Jay] I think you are confused by what I (and others) mean. No serious person is suggesting we do away with private insurance. We’re suggesting that the United States government not become the primary insurer of most Americans (it already is for seniors, military retirees, and the poor).

As Barney Frank might say, this is a shibboleth. You seem to assume we're all going to negotiate directly with our doctors. There are obviously still going to be insurers. They'll be private insurers, not the single payer that many government-sponsored (how's that sound) proponents favor. One of the changes McCain wants to make is to allow consumers to be able to cross state lines and buy health insurance. This would allow us all to seek the insurer who's plan most closely matches our needs and pocketbook, without being tied to some of the cost-creating legislation that some states like to add. Just as states like SD and DE make it easier for credit card companies to operate in their states, other states would become clearinghouses for health insurers. Ultimately, you’d see rationalization in these plans as consumers settle on the minimums acceptable to them. This would go a ways towards introducing free-market forces into a system largely devoid of them.

[Him]My recent MRI would have cost me $1200 out of pocket, but my health insurance company had negotiated a rate of only $630. The same is true for a private (or COBRA) insurance plan, it would cost me thousands of dollars more than the one with AT&T.

[Jay] The point is that bulk creates negotiating ability. Sure, I agree, but, without competition, don't we just create the New AT&T, only this time run by bureaucrats. I think we can all agree the consumer is much better off after telcom deregulation. Much the same would be true if we allowed the free market a greater hand in health care.

[Him]I personally hate the effects of the whole "Consumer Driven Health Care" movement. What it does is cause you to sometimes avoid a procedure or medical action if the cost is too high. And I'm not talking about elective surgery. Awareness is good. Choosing to avoid medical care because of cost is not.

[Jay] Perhaps the devil is in the details here. And, you need to recall that CDHP’s are a relatively new invention, and still limited by regulation. Democrats in Congress have successfully fought to place limits on what qualifies as CDHP’s and when you can use an HSA. Conservatives have long proposed that those very large deductibles and out-of-pocket expenses that it takes to today qualify as a CDHP/HSA be reduced, making them more attractive to consumers. This is another free-market reform we could achieve today. Regardless of WHO has thwarted this (Democrats), Conservatives and Libertarians want to see these plans made more available and more attractive, by decreasing those deductibles and out-of-pocket maximums, and increasing the amount of money people can put into HSA’s.

Part of the reason I don't use the AT&T HSA plan is really the reason you cite here. The out-of-pocket expenses are too high for me, joining it with two kids and a wife. If I was 23, it would be a no brainer though. However, because HSA's are limited in number, they are also limited in what kinds of plans qualify for them. A more friendly Congress to consumer choice could help alleviate the problem you mention, by lowering the amounts on the plan to qualify for HSA, and increasing the amount of money you can put into an HSA. These are reforms and things conservatives have pushed for. However, in that these plans force the consumer to think twice about going to the DR for the sniffles, going to the emergency room for a little cut, or deferring care for items they shouldn't be wasting expensive doctor’s or ER time on, I think that's a good thing. I know when we were growing up, we didn't go to the Dr. for everything. People are conditioned to do that now, because the cost is shielded from them.

Do you have firsthand knowledge of someone who has avoided a medical care because of their participation in a CDHP? Or, is this theory?

[Him]No I do not agree with you that competition is the key to solving this problem.

[Jay] I know. I believe in the free market, and you may not. The fact that a purely free market would surely charge the sick more for insurance is a problem that we have to come to grips with when applying purely free market solutions to health care. That is the largest problem to purely free market solutions and is why this is such a difficult problem. But, I think we can design a system that maintains as many free market principles as possible and address the cost issue for higher-risk people, the portability problem, and the coverage problem. I’m not arguing as a Libertarian, who might just say – “let them eat cake.”

[Him]Here's a nice (and fair) analysis of their two proposals:

[Jay] I looked at the site. It seems a reasonable analysis of the plans as they stand today. I like the voting, obviously this site is hit by those on the left much more than those on the right. Even on the funding issue, where there is NOTHING good said about the Obama plan, the "voters" still give it an overall passing grade. Either the site is hit by partisans, or, people are willing to pay ANYTHING for what Obama is offering. At any rate, the analysis doesn't go far enough to suggest the ultimate result of Obama-care, which will be a government run single payer system.

[Him]Universal coverage is critical to any plan I would support, but I am concerned about what the Obama plan would cost.

[Jay] It would cost a lot. It would eclipse Medicare and Medicaid immediately and would rival social security. Plus, it would ultimately put the government in charge. You may trust your government to do the right thing, I don't. I see Obama's plan as a step towards socialism. The United States is not England, Canada, France, or Cuba. I will reject arguments that we should be more like them. We are the greatest country on earth precisely because we are not like them.

[Him]I would like to see the best of both plans, and other ideas, combined - but the likelihood of the country coming together is pretty slim.

[Jay] It won’t happen as long as Obama continues to scare people by telling them lies about McCain’s plan, as he dis in the debate and does on his stump speeches (I watched one yesterday, it was maddening listening to the misrepresentations).

More References for you:

• on rationing in England
• more on english rationing, and this is a socialist site complaining about rationing in England, and trying to blame it on a profit motive in the National Health Service.
• A dated, but still relevant paper on the dangers of price controls and rationing in the Health Care industry.
• James Capretta’s blog
  

Health Care Solutions, Chapter 1: How We Got Here

That our current health care system has serious flaws can not be denied. I can not believe there is a single serious Conservative or Liberal who could not agree on that. Yet, both sides differ greatly in their prescriptions for the problems that ail us.

I am a free marketer, a believer in capitalism, and have a general distrust of the government's ability to do anything well where we want innovation and cost control. I believe Ronald Reagan's greatest legacy to this country was to re-prove the ability of free markets to drive innovation up and costs down. He showed us that when we removed the shackles of government, in the form of high taxation and excessive regulation, the free market was the best friend the consumer could have, and the only natural way for economies to function.

As history, the current employer-provided health care system grew out of wage and price controls instituted during WW2. To attract the few qualified people not actually fighting the war, employers began offering health plans. Unions picked these up as parts of collective bargaining agreements, and during the explosive growth years after the war, health plans became more and more comprehensive and feature rich. Ultimately, the government got into the act, favoring employer-sponsored plans via large tax incentives to the employer. It is estimated the value of these tax incentives is $150B annually.

So, after 60 years, we're got a health care system that essentially is tied to employment. If you're employed, you have health care, if not, well, you probably don't, unless you fall into one of those groups that the government plays the 3rd party role - the poor via Medicaid, or seniors, via Medicare. Roughly 60% of people in the US are covered under employer-provided heatlth plans, with about 10% covered under privately-purchased plans. The remainder of the covered are covered under the two government programs. Most estimates are that about 16% of the population is uncovered at any given time.

Medicaid is a true transfer payment, where we all pay income taxes that get redistributed to those unable to care for themselves. It's welfare. Like it or not, we have chosen that system through our elected officials. It isn't changing, and as a safety net, it's a necessary system in this country.

Medicare plays the same shell game we play with Social Security, and is tied to it. Via payroll taxes, we all "pay into" Medicare as we work, so that we can draw from it after we retire at age 65. That's the story, but, like Social Security, we're actually paying today for someone else's Medicare. Regardless, the idea is it's insurance bought for the future. Die at 61 and, well, your Medicare taxes work for someone else. Live to be 100, and, well, you get the picture.

I think we can all agree that there are many structural problems with our health care system, chief among them:

1. The market is controlled by 3rd parties (an insurer/employer cabal)
2. The system is focused on the provider.
3. Costs and quality are unknowns to the consumer. Quality is unknown before the fact and costs are often unknown forever.
4. The system focuses on sickness and disease and not prevention
5. Medicare faces significant funding issues.
6. Large number of Americans are uninsured

I'll address my thoughts in posts to come.... Nothing after the jump